BIR Ruling [UN-440-95]

December 13, 1995 BIR RULING [UN-440-95] Pamantasan ng Lungsod ng Maynila Intramuros, Manila Attention: Ms . Edelita F . Reyes Vice-President for Administration Gentlemen : This refers to your letter dated September 29, 1995 relative to BIR Ruling No. UN-345-95 dated September 26, 1995 where this Office ruled that xxx xxx xxx "In view of the foregoing considerations, this Office is of the opinion as it hereby holds that each of the said sixteen faculty members should report as income and pay their respective income taxes thereon by allocating or spreading their backwages, allowances, and benefits through the years from their illegal dismissal to their actual reinstatement. [BIR Ruling No. 057-83 dated April 12, 1983]" It appears that you have deducted and withheld the income tax due on such backwages, allowances and benefits which shall be remitted to the BIR; that the said faculty members however contended that if they are liable to pay income taxes, the same should not be withheld by the Pamantasan Ng Lungsod Ng Maynila (PLM) because they will pay their respective income taxes to the BIR at the appropriate time; and that a criminal complaint has already been filed by three (3) of the faculty members against the officials of the PLM as a result of the deduction and withholding of the income tax on their backwages, allowances and benefits. In reply thereto, please be informed that an employer making payment of wages or compensation shall deduct and withhold from such compensation a tax determined in accordance with the prescribed new Withholding Tax Tables effective January 1, 1986, (Sec. 4, Revenue Regulations No. 12-86 implementing Sec. 72, Tax Code, as amended). Considering that such backwages, allowances and benefits constitute remunerations for services that would have been performed by the said sixteen (16) faculty members prior to the year (1995) when actually received, or during the period of their dismissal from the service which the Civil Service Commission has ruled to be illegal, such backwages, allowances and benefits are subject to the withholding tax on wages. In view thereof, the taxes deducted and withheld by you from the backwages, allowances and benefits of the sixteen (16) faculty members of the Pamantasan ng Lungsod ng Maynila should be remitted within ten (10) days after the end of each calendar month, however, for the month of December, the remittance is on or before January 25 of the succeeding year together with the filing of the appropriate return to the collection agent where your principal office is located. (Revenue Regulations No. 3-93) cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)